I was, until recently, Economics Editor of The Telegraph. You can find my book - 50 Economics Ideas You Really Need to Know - here.

What economics teaches us about drugs

In all the coverage in the papers about mephedrone – the new as-yet-legal drug also known as meow meow and connected with the death of a number of unfortunate young people recently – there has been little focus on the economics. Which probably ought not to be a surprise, since this is an emotive issue. But economics helps explain why drugs like mephedrone have gained popularity in the past year or so: quite simply – because they are so cheap.

The average cost of a gram of cocaine in the UK, according to DrugScope, the independent experts on these things, was £39. The price for a gram of mephedrone is closer to a tenner. A gram of ketamine costs half as much as the cocaine, and when you bear in mind that, according to analysis by the Forensic Science Service the average purity of cocaine these days is 26.4pc, compared with 45pc only five years ago (and 63pc in 1984), the value comparison is pretty stark.

Even in the illicit world of drugs (or not so illicit, yet, in the case of mephedrone), price still matters. We know from statistics that the proportion of 16-24 year olds who indulge in these kind of things has been pretty steady (at around 10pc) for some years. So let’s not panic about that. What’s changed is the kind of things they tend to consume: consumption of cheaper drugs like ketamine and mephedrone has leapt in the past couple of years.

Another often-unremarked dynamic is availability: mephedrone has similar effects to ecstasy tablets. So it is probably no coincidence that mephedrone’s rise in popularity has coincided with an a sudden and unprecedented shortage in ecstasy in the UK, something which is linked to the seizure of 33 tonnes of sassafras oil (one of the main ingredients of ecstasy) in Cambodia in June 2008.

With youth unemployment running at the highest level for over a decade, and Britain still stuck in the jaws of recession, I would be shocked if youngsters hadn’t become more price conscious – including about drugs. Now, a separate issue is that mephedrone is clearly too easy to get hold of – something which will not be the case after its almost inevitable ban. But, as I say above, this isn’t the obstacle many people assume it is. The evidence suggests that there is a certain small proportion of people who will want to take drugs even if they are illegal, and whether something is or isn’t illicit won’t change this. Over time we can and should try to reduce this through rehabilitation and education (drugs are anti-social and psychologically and physically degrading at best, potentially fatal at worst), but experience shows that simply making things illegal is not the silver bullet so many seem to think. On the contrary. Price dynamics, on the other hand, do seem to change peoples' behaviour.

And here the evidence for mephadrone is not encouraging. Since Ketamine was made a class C drug in 2006, its price has actually fallen from £28 a gram to £20. This almost certainly suggests that drug dealers are cutting costs by mixing it with God knows what else. The same will almost certainly happen with mephadrone if it is outlawed: it will become more difficult to get hold of (but that won’t matter for the vast, vast majority of those who want to try it), the price will fall, and so will the purity, making it more dangerous.

Finally, distressing and upsetting as it is to hear of young people dying on what are supposed to be nights of celebration and fun, let’s not forget that alcohol is a far more dangerous drug, killing far more people. What makes mephedrone different is that many of the kids taking it do not know the dangers. The lesson surely ought to be to warn people of these risks and make it more difficult to get hold of, rather than shoving it blindly into the criminal world, where it will become far more dangerous?